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Big data takes on challenge of subsea values

VesselsValue has broken into subsea after years, while admitting the limitations of big data

VesselsValue has this week launched a live online valuations service for the subsea sector, a move that has been on the drawing board since 2016.

“Yes, we are finally into subsea. This is kind of the last piece of the offshore puzzle,” VesselsValue head of offshore Charlie Hockless told TradeWinds.

The UK data provider, a sister company of Richard Rivlin-led Seasure Shipbroking, has faced challenges in estimating values for automated subsea vessels because of the extremely specialised nature of the sector.

After establishing itself in highly commoditised blue-water sectors such as dry cargo from 2011, VesselsValue took on the core offshore segment for ships carrying out platform supply and anchor handling in 2016.

It then launched into rigs in 2017. That move came with a live interactive mapping system for overlaying the global fleet of OSVs and drilling units over the world’s offshore wells, pipelines, platforms and licence blocks.

The new service, which tackles upwards of 50,000 total valuations per day, covers a wide range of subsea and windfarm-related vessels. That includes offshore construction vessels, dive support vessels and multipurpose support vessels (MPSVs).

However, the low global population and scarcity of sales for the most specialised ships means part of the subsea sector has finally stumped the company’s algorithm.

“Values are automated for the more standard subsea types, like MPSVs and DSVs, but some vessels will have to be done on a bespoke basis,” Hockless said.

“For example, the pipe-laying market and heavylift vessels are so specialised that we kind of had to accept the limitations of the methodology.

"In the subsea sector, some ships are built on a project basis and they can be so specialised that some sales do not necessarily relate to any other vessel.”

Offshore shipbrokers agree with Hockless, citing the best recent example as the sale of the 178-metre pipe-layer Lewek Constellation (built 2014) to Italian subsea contractor Saipem for $275m.

“That was a one-of-kind sale. Period. It was a good price for both the seller and the buyer but it would be totally wrong to try to say anything about overall subsea values based on that one deal,” one broker said.

Hockless explained that the algorithm is continuously tweaked and updated but the basic methodology is the same across the offshore sectors.

It takes into account a wide range of the vessels’ characteristics, including age, size, winches and navigations systems.

It also tracks charter contracts in place and the oil price, which VesselsValue says has a near 80% correlation with predicted values in the offshore sector.

Conventional wisdom

Hockless’ upfront acknowledgement that some valuations need help from hands-on conventional intelligence addresses the primary concern of offshore brokers and owners when VesselsValue entered the sector in 2016.

At that time, when the downturn began to weigh heavily on the sector, VesselsValue immediately began undercutting offshore brokers’ valuations and owners’ book values by massive margins.

In 2016, when VesselsValue first publicised its valuation on the Norwegian offshore fleet, the figure was a stunning 65% less than a widely used valuation from an industry body in Norway.

The chasm between those two figures — $7bn versus $20bn — drew the ire of Idar Hillersoy, formerly chief executive of Siem Offshore.

“VesselsValue does not know what they’re doing and should concentrate on valuing tankers and dry cargo ships,” Hillersoy told TradeWinds’ sister paper Dagens Naeringsliv in 2016.

However, times have changed rather quickly as concepts such as artificial intelligence and machine learning have become much more commonplace in shipping.

Additionally, after years of successive vessel impairments by all owners and steep downward adjustments from shipbrokers, the complaints against VesselsValue have largely subsided. Some Norwegian offshore brokers have even used the data provider’s figures in monthly reports with clear attribution.

Offshore growth

Hockless said that 2017 turned out to be the best year ever for the offshore side of VesselsValue, as business expanded fivefold.

He pointed out that more banks are taking a second look at the service after previously being reluctant to embrace the low values of ships in their portfolios. But private equity funds, looking for low-cycle investments, represent a significant portion of new clients on VesselsValue’s offshore side last year, he said.

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Big data takes on challenge of subsea values

VesselsValue has broken into subsea after years, while admitting the limitations of big data

VesselsValue has this week launched a live online valuations service for the subsea sector, a move that has been on the drawing board since 2016.

“Yes, we are finally into subsea. This is kind of the last piece of the offshore puzzle,” VesselsValue head of offshore Charlie Hockless told TradeWinds.

The UK data provider, a sister company of Richard Rivlin-led Seasure Shipbroking, has faced challenges in estimating values for automated subsea vessels because of the extremely specialised nature of the sector.

After establishing itself in highly commoditised blue-water sectors such as dry cargo from 2011, VesselsValue took on the core offshore segment for ships carrying out platform supply and anchor handling in 2016.

It then launched into rigs in 2017. That move came with a live interactive mapping system for overlaying the global fleet of OSVs and drilling units over the world’s offshore wells, pipelines, platforms and licence blocks.

The new service, which tackles upwards of 50,000 total valuations per day, covers a wide range of subsea and windfarm-related vessels. That includes offshore construction vessels, dive support vessels and multipurpose support vessels (MPSVs).

However, the low global population and scarcity of sales for the most specialised ships means part of the subsea sector has finally stumped the company’s algorithm.

“Values are automated for the more standard subsea types, like MPSVs and DSVs, but some vessels will have to be done on a bespoke basis,” Hockless said.

“For example, the pipe-laying market and heavylift vessels are so specialised that we kind of had to accept the limitations of the methodology.

"In the subsea sector, some ships are built on a project basis and they can be so specialised that some sales do not necessarily relate to any other vessel.”

Offshore shipbrokers agree with Hockless, citing the best recent example as the sale of the 178-metre pipe-layer Lewek Constellation (built 2014) to Italian subsea contractor Saipem for $275m.

“That was a one-of-kind sale. Period. It was a good price for both the seller and the buyer but it would be totally wrong to try to say anything about overall subsea values based on that one deal,” one broker said.

Hockless explained that the algorithm is continuously tweaked and updated but the basic methodology is the same across the offshore sectors.

It takes into account a wide range of the vessels’ characteristics, including age, size, winches and navigations systems.

It also tracks charter contracts in place and the oil price, which VesselsValue says has a near 80% correlation with predicted values in the offshore sector.

Conventional wisdom

Hockless’ upfront acknowledgement that some valuations need help from hands-on conventional intelligence addresses the primary concern of offshore brokers and owners when VesselsValue entered the sector in 2016.

At that time, when the downturn began to weigh heavily on the sector, VesselsValue immediately began undercutting offshore brokers’ valuations and owners’ book values by massive margins.

In 2016, when VesselsValue first publicised its valuation on the Norwegian offshore fleet, the figure was a stunning 65% less than a widely used valuation from an industry body in Norway.

The chasm between those two figures — $7bn versus $20bn — drew the ire of Idar Hillersoy, formerly chief executive of Siem Offshore.

“VesselsValue does not know what they’re doing and should concentrate on valuing tankers and dry cargo ships,” Hillersoy told TradeWinds’ sister paper Dagens Naeringsliv in 2016.

However, times have changed rather quickly as concepts such as artificial intelligence and machine learning have become much more commonplace in shipping.

Additionally, after years of successive vessel impairments by all owners and steep downward adjustments from shipbrokers, the complaints against VesselsValue have largely subsided. Some Norwegian offshore brokers have even used the data provider’s figures in monthly reports with clear attribution.

Offshore growth

Hockless said that 2017 turned out to be the best year ever for the offshore side of VesselsValue, as business expanded fivefold.

He pointed out that more banks are taking a second look at the service after previously being reluctant to embrace the low values of ships in their portfolios. But private equity funds, looking for low-cycle investments, represent a significant portion of new clients on VesselsValue’s offshore side last year, he said.